Phil Kotler wrote in “Kotler Value in Marketing”, in the Journal of Creating Value:
“Outstanding marketing companies see marketing as intrinsically involved in value creation.”
He also asked and answered:
“How Has the Notion of Marketing Shifted Towards Value Creation?
Leading marketers see modern marketing to be all about value creation. Marketing aims to meet human needs by creating value. The marketer chooses the product features and services that will deliver value. The marketer chooses prices that will create value in exchange. The marketer chooses channels of distribution that create accessibility and convenience value. The marketer chooses messages that describe the value their offerings create. I do not know what you thought marketing was, but in my mind, marketing is intrinsically a value-creating discipline.”
What is value creation:
Creating Value is executing normal, conscious, inspired mindset and actions that increase the overall good and well-being, and the worth of and for ideas, goods, services, people or institutions including society, and all stakeholders (like employees, customers, partners, shareholders, environment and society), and value waiting to happen.
In business, value creation is all about the worth (of a person, product, idea etc.)
Measuring value as worth
What is worth? What is value as worth.
Worth (or Value) consists of both benefits and cost. People buy what they consider gives them greater value than competitive products. Benefits could include the benefit of the product, your people, your brand, your service etc.
Cost includes price and non-price factors. For example the cost of buying a greeting card is the time and effort it takes to go to browse for the card, pay for it, fill it by hand and then mail it. This cost is too high for most of us.
Create value and become leaders.
Value is always measured against competition. This takes away individual and geographic biases. You measure, for example, Customer Value Added (like economic value added). You can measure stakeholder value (as an example employee value added.
Customer Value Added = The Value you Add to your Customers
The Value your competition adds to its Customers
How is it created: You can create limited value for yourself
You create more value for yourself when you create value for others, and they in turn create value for you.
Take customers:
You create value for them and they create value for you, and if they create more value for you than you for them you get excess value which is in a sensed profit.
Figure 1. The Profit Cycle
Value for Stakeholders
This analysis can be done for various stakeholders. When we do this, we can understand the value added by employees to the company and the employees’ profitability for the business or the company. Likewise, an analysis can be done for stakeholders such as environment or society and the profit/loss from them.
Converting Stakeholders into Profit Centers
Conventionally what we do for stakeholders is an expense or a cost to the company. In value thinking we convert each of the stakeholders into profit centers, and those responsible for such stakeholders have to make them more profitable. How can this be done? By devising means to create value from the stakeholder. For example, if we have a waste gas and let it out into the air, it is a cost to us. If we have to purify it before letting it out into the air, it is an additional expense to us. If we can recycle and use or sell the waste gas, it becomes income generating. Or if we reduce the waste gas in some fashion, our cost is reduced.
Such ‘profit’ thinking makes us more sustainable or better in the eyes of the society or the employee, all additional value generating.
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Conclusion from Philip Kotler
“Will Value Creation Make Marketing More Relevant?
New approaches or theories of value creation will always interest marketers.
Marketers are value engineers by definition.
How Can Marketing Train or Suggest to Company
Colleagues to Create Value
In top companies, chief marketing officers (CMOs) spend 50 per cent of their time
guiding other company officers on how to create real value for their target
customers. Marketers know that their success depends on how well the other
business chiefs cooperate to create a complete value package for the target
consumers. Marketers send to their colleagues the best cases and articles that
illustrate value creation by marketers.”
Reference marketing and Value Creation, Kotler Journal of Creating Value 6(1) 10–11, 2020
© The Author(s) 2020
Reprints and permissions: in.sagepub.com/journalspermissions-india
DOI: 10.1177/2394964320903559 journals.sagepub.com/home/jcv